Treasurer Curtis Loftis Wants Review of State Pension System

Columbia, SC (AP, WLTX) -- South Carolina Treasurer Curtis Loftis says the state pension system is underperforming and paying too much in fees.

Loftis testified Tuesday to a Senate Finance subcommittee.

Legislators are looking to reform the pension system to make it more secure. One possibility is to require public workers to contribute more of their salary to their retirement benefits.
Loftis says the system should be making more money.

"We are allowing outsiders control over our fund who have virtually no accountability or transparency," said Loftis. "To put billions of public money into the hands of third party managers is simply unacceptable." He says South Carolina's pension fund has underperformed when compared to similar funds in the past one, three and five year periods.

The state's investment portfolio earned an 18 percent rate of return for the fiscal year that ended June 30, not including fees. That compares with a nearly 22 percent median return last year for 91 public pension systems with more than $1 billion in assets.

A news release from Loftis' office further outlined his concerns saying investment management fees have jumped from $31 million in 2005 to $343 million in 2011.

"I'm calling for a review of all of our alternative investments those investments that are riskier, those investments that are very complicated. We need to be in a fund that we can manage. and I think the review of these complicated investments toward the right direction," said Loftis.

The vice chairman of the commission that manages the portfolio says contracts require for fees to rise with profits.